Facebook Is Becoming The Top Driver Of Retargeted Ad Clicks

Facebook Exchange (FBX) is the first-ever social media real-time bidding exchange; it allows Facebook to get in on the fast-rising retargeted display ads category, while advertisers get a slice of Facebook's incredible reach, and thus, a much better ability to target consumers.

At the end of 2012, FBX accounted for nearly half of all clicks on retargeted ads, according to L2 Think Tank. These are ads served to consumers reminding them of their interest in a product that they have already browsed for online. By now, FBX likely accounts for well over half of retargeted clicks.

How FBX Works:FBX is Facebook's programmatic buying technology that anonymously matches unique digital identifiers with Facebook users, allowing DSPs to serve ads to those users based on their Web browsing history. The report details which DSP partners Facebook is working with and how FBX right-rail ads compare to FBX Newsfeed ads.

Fast Out Of The Gate: FBX produced stellar early results for advertisers, both in terms of cost and performance. Eventually, the price and performance bar will be set higher. That's already starting to happen for better-performing Newsfeed placements.

FBX's Size:Despite FBX's huge weight in the retargeting space, it still constitutes a small share of overall Facebook revenues.FBX is not yet available on mobile, though this may be coming soon. Additionally, Sponsored Story social-native ads, which are at the heart of Facebook's ad ecosystem, aren't accessible via FBX. The FBX Newsfeed ads are still limited in terms of their social features.

The Purpose of FBX Ads:FBX ads focus on demand fulfillment. Demand fulfillment is all about getting people to buy something they know they already want, or have at least shown interest in. Historically, Facebook ads have focused on top-of-funnel activity, otherwise known as demand generation — trying to convince consumers why they would want to buy something. FBX opens the site up for advertising that reminds consumers what they want to buy.

Why Native Ads May Steal The Show: The trend across social media sites is toward native ads, as opposed to ads purchased through ad exchanges. For this reason, we expect more expensive native advertising purchased through non-programmatic avenues to account for the bulk of Facebook ad revenues going forward. Nonetheless, display is and will remain a huge aspect of advertising on the Web.